Canada’s housing market will move into a protracted slump around 2018 thanks to shifting population patterns, the Bank of Montreal predicts in a new analysis.

Economist Robert Kavcic says Canada’s long-running housing boom has been held up by demographics. A large number of “echo boomers,” children of the baby boomer generation, are currently in the 25-34 age range when people buy first homes.

This helps explain why condo construction has been so strong in recent years, Kavcic says -- young homebuyers prefer the urban lifestyle. To prove his point, he offers a chart showing that the last major housing market crisis in Canada -- in the late 1980s and early 1990s -- took place at a time when there was an unusually low number of people in the 25-34 age group.

But what is good for Canadian house prices today may be bad news a few years down the road, as the number of people in the home-buying age range will begin to shrink this decade and will put downward pressure on the market starting around 2018, Kavcic writes.

He says that means Canada is “in the seventh inning” of its housing bull market.

Strong immigration into major centres like Toronto, Vancouver and Calgary will support the housing markets in those cities, but Quebec and Atlantic Canada, with lower population growth, will face a “significant challenge.”

The BMO analysis came the same week as a new report from the IMF identified Canada as one of a growing number of countries where house prices are becoming excessive relative to incomes.

The IMF identified Canada as having the world's second most expensive housing market, by that measure, with Belgium coming in first.

The IMF didn’t use the term “housing bubble,” but warned that "the world must act to contain the risk of another devastating housing crash." The report made clear the IMF sees central banks’ low interest rates as causing house price inflation in many parts of the world.

“This is true for instance for Australia, Belgium, Canada, Norway and Sweden.”

Many economists in Canada have been arguing that this is not a good measure of the health of the housing market, because those rock-bottom interest rates have made mortgage payments affordable even if prices are high.

However, that logic applies to the other countries with overvalued housing markets. Sweden’s key lending rate is lower than Canada’s at 0.75 per cent, and Belgium’s most-overpriced market benefits from the EU’s incredibly low 0.15 per cent base rate. This suggests that, whether or not a global housing correction is in the cards, Canada will be no exception.

BMO's Kavcic sees some bright spots on the horizon. He notes that those echo boomers who are buying condos today will soon start having children and will want to move into single-family homes, which will support that segment of the housing market. He even sees further upward pressure on single-family home prices, especially in cities that attract a lot of immigrants.

“Trust me, backyards and quiet streets move way up the priority list when the kids start moving,” he writes.

But in many of Canada’s largest housing markets, such as Toronto and Vancouver, single-family homes have become effectively unaffordable for average earning households (see slideshow below).

Minimum qualifying income for a standard two-storey home.
For a detached bungalow: $65,400
For a condo: $51,300
Source: RBC

Minimum qualifying income for a standard two-storey home.
For a detached bungalow: $75,800
For a condo:
Source: RBC

Minimum qualifying income for a standard two-storey home.
For a detached bungalow: $81,200
For a condo: $52,400
Source: RBC

Minimum qualifying income for a standard two-storey home.
For a detached bungalow: $89,300
For a condo: $60,600
Source: RBC

Minimum qualifying income for a standard two-storey home.
For a detached bungalow: $96,700
For a condo: $57,200
Source: RBC

Minimum qualifying income for a standard two-storey home.
For a detached bungalow: $119,800
For a condo: $73,000
Source: RBC

Minimum qualifying income for a standard two-storey home.
For a detached bungalow: $155,100
For a standard condo: $75,100
Source: RBC

NEXT:
CANADA'S TINIEST HALF-MILLION-DOLLAR HOMES

With the number of bedrooms in this house listed as "zero," it's pretty clear this former dental clinic in Toronto's East York is a pretty small house. The realtor boasts of "easy access" to highways (it's near the Don Valley Parkway) and transit.

With the number of bedrooms in this house listed as "zero," it's pretty clear this former dental clinic in Toronto's East York is a pretty small house. The realtor boasts of "easy access" to highways (it's near the Don Valley Parkway) and transit.

With the number of bedrooms in this house listed as "zero," it's pretty clear this former dental clinic in Toronto's East York is a pretty small house. The realtor boasts of "easy access" to highways (it's near the Don Valley Parkway) and transit.

The house may only have 726 square feet, but the spacious 60-foot-by-140-foot lot means you can potentially build two new homes on the spot, and that's pretty much this property's main selling point.

The realtor selling this one doesn't even pretend the house is good value for money -- this house is "lot value only," is an opportunity for developers or investors to build something new on the land.

The realtor selling this one doesn't even pretend the house is good value for money -- this house is "lot value only," is an opportunity for developers or investors to build something new on the land.

It may be super narrow, but this house in north Toronto actually has two stories and three bedrooms. It has a walk score of 90, so if avoiding traffic jams is your thing this could actually be something of a decent bargain...

It may be super narrow, but this house in north Toronto actually has two stories and three bedrooms. It has a walk score of 90, so if avoiding traffic jams is your thing this could actually be something of a decent bargain...

It may be super narrow, but this house in north Toronto actually has two stories and three bedrooms. It has a walk score of 90, so if avoiding traffic jams is your thing this could actually be something of a decent bargain...

This house is a little less expensive than the others on this list, but it's here to illustrate just how little $430,000 will get you in Toronto these days. Two bedrooms in this house, but the realtor says you can still rent out the basement.

This house is a little less expensive than the others on this list, but it's here to illustrate just how little $430,000 will get you in Toronto these days. Two bedrooms in this house, but the realtor says you can still rent out the basement.

This house is a little less expensive than the others on this list, but it's here to illustrate just how little $430,000 will get you in Toronto these days. Two bedrooms in this house, but the realtor says you can still rent out the basement.

Someone managed to squeeze four bedrooms into this little home in the Vancouver suburb of New West, but the realtor still sees building a new home on the spot as a good option.

Someone managed to squeeze four bedrooms into this little home in the Vancouver suburb of New West, but the realtor still sees building a new home on the spot as a good option.

Someone managed to squeeze four bedrooms into this little home in the Vancouver suburb of New West, but the realtor still sees building a new home on the spot as a good option.

Two bedrooms in this little house but the real value is the land -- it has a 110-foot long lot, which on Toronto's inner east side is a sizable chunk of land.

Two bedrooms in this little house but the real value is the land -- it has a 110-foot long lot, which on Toronto's inner east side is a sizable chunk of land.

Two bedrooms in this little house but the real value is the land -- it has a 110-foot long lot, which on Toronto's inner east side is a sizable chunk of land.

Just because a house is tiny and overpriced doesn't it can't be colourful and meticulously decorated. Check out this little three-bedroom place in Victoria's inner city. The realtor boasts that the yard has a "really big organic garden -- no GMO seeds or chemicals used in 100 years." Yes, this must be British Columbia.

Just because a house is tiny and overpriced doesn't it can't be colourful and meticulously decorated. Check out this little three-bedroom place in Victoria's inner city. The realtor boasts that the yard has a "really big organic garden -- no GMO seeds or chemicals used in 100 years." Yes, this must be British Columbia.

Just because a house is tiny and overpriced doesn't it can't be colourful and meticulously decorated. Check out this little three-bedroom place in Victoria's inner city. The realtor boasts that the yard has a "really big organic garden -- no GMO seeds or chemicals used in 100 years." Yes, this must be British Columbia.

Would you believe this house has two apartments in it? There's a three-bedroom unit upstairs and a two-bedroom unit in the basement. With a monthly rental income of around $2,500, you won't cover the mortgage on it, but an investor could make some money.

Would you believe this house has two apartments in it? There's a three-bedroom unit upstairs and a two-bedroom unit in the basement. With a monthly rental income of around $2,500, you won't cover the mortgage on it, but an investor could make some money.

Would you believe this house has two apartments in it? There's a three-bedroom unit upstairs and a two-bedroom unit in the basement. With a monthly rental income of around $2,500, you won't cover the mortgage on it, but an investor could make some money.

The realtor on this property doesn't even pretend the house is godo value for money. This is "lot value only," and presents an opportunity for investors and developers. Two bedrooms and two baths in the current house on the site.

Two bedrooms and two bathrooms in this house on the city's east side. There's also a finished basement.

Two bedrooms and two bathrooms in this house on the city's east side. There's also a finished basement.

Two bedrooms and two bathrooms in this house on the city's east side. There's also a finished basement.

NEXT:
MOST EXPENSIVE HOUSES FOR SALE IN CANADA, FEB. 2014 EDITION

This six-bedroom home in St. John’s, constructed over 100 years ago, boasts beautiful original features like beveled glass and “intricate” plaster work, as well as modern additions, such as “spa inspired ensuites with in-floor heated marble,” according to the listing.

This is actually two finished houses on 235 acres of land near St-Francois, N.B., and it's definitely one of those properties that look better on the inside than the outside. Vaulted ceilings and fireplaces adorn this building, which also boasts long walks in the woods -- on the property.

A place like this in Vancouver or Toronto could easily run you a cool $10 million, but in Regina all it takes is $3.8 million (pocket money, right?). This six-bedroom, four-bath property has parking space for no fewer than six cars and has more than 6,000 square feet of living space, including some pretty breathtaking staircases and foyers, and one heck of a billiard room.

This place is huge -- more than 13,000 square feet of living space in this five-bedroom, nine-bath house in Winnipeg. The house features 24-foot ceilings, a wine cellar, wet bar, media room and gym. There are also numerous terraces, an infinity spool, spa and gazebo. You could almost start a fitness club out of this place.

This unique property in Ketch Harbour, N.S. has been having a hard time selling; it's made HuffPost's most expensive houses list twice before. But the property recently received a boost in the form of a feature article in Architectural Digest. The location is certainly unique; just look at the photos. There are three bedrooms and five baths in this 6,000-square-foot house.

This 13,500-square-foot house sits on the north shore of P.E.I. (Anne of Green Gables country) and boasts 11 acres of land, a custom design by "a nationally renowned American architect," six bedrooms and nine baths.

This house, an Architectural Digest showpiece, sits in the foothills of the Rockies in Canmore "amid snow-tipped mountains and vast forest parkways," the realtor boasts. The property features "outdoor living rooms" to take in the scenery, a great hall with totem poles, a two-story library and no fewer than five fireplaces. There are six bedroom as well.

This is a "gated estate" featuring a main residence and three guest houses. Among its features is an integrated "whole house" sound system, a dock on Lake Memphremagog, and parking spaces for 65 cars. Yes, 65.

The most expensive house in Ontario is on sale half-finished. This property in Toronto's ritzy Bridle Path neighbourhood features a whopping 24,000 square feet of living space on two acres of land -- quite a lot, given it's in Toronto. It has a grand ballroom with 23-foot ceilings, and two elevators. Also, seven bedrooms and 14 baths. Sadly, not many pictures of this property are available.

$35 million is a ton of money for a house, but technically, this is two houses -- both sides of this duplex are for sale together. Located in Vancouver's wealthy Shaugnessy Heights district, the property can remain as two houses or be integrated into one -- in which case it's a 12,200-square-foot house with nine bedrooms, 13 bathrooms, nine fireplaces and an elevator. Sorry, no interior shots of the property are available, but we're willing to bet it's pretty awesome.